Retention is your money. Someone else is holding it.
Enter your contract price, retention rate and limit. See exactly what is being withheld, the point at which no further deduction is permitted, and when each half of it falls due.
The mechanism
Held until the limit bites, usually at 5% of the contract price. Half comes back at taking-over. The rest waits out the defects period, often another twelve months.
On a 100 million contract that is 5 million sitting in someone else's account, and the second half of it is a year away from the day you finish.
Your retention position
Figures come from your contract data and the latest interim payment certificate.
Gross, before retention is deducted.
Commonly 5 or 10 percent.
Of contract price. Enter 0 for no limit.
Release terms
Conventionally half.
Months from taking-over.
Optional. Adds dates to each release.
Enter your contract price and the value certified to date to see what is being held and when it comes back.
Why This Exists
Retention is rarely disputed. It is simply forgotten.
Unlike a variation or a delay claim, retention is not usually argued over. The entitlement is plain on the face of the contract. What happens instead is that the project team demobilises, the commercial staff move to the next job, and nobody applies for the release when the defects period expires.
Two failures account for most of the loss. The first is over-deduction past the limit of retention, which accumulates quietly because nobody checks the ceiling against the certificates. The second is the second tranche, which falls due long after everyone has stopped watching the contract. Both are administrative failures, which is what makes them recoverable. The detail sits in how holdback works and how to actually get it back.
The Mechanism
Three moments that decide whether you get it back.
During the works
- Retention deducted from each interim certificate
- Accumulates until the limit of retention is reached
- Check every certificate against the ceiling
- Over-deduction past the limit is common and refundable
At taking-over
- First half certified on the Taking-Over Certificate
- FIDIC 1999 and 2017 Sub-Clause 14.9
- Apportioned where sections are taken over separately
- Apply for it, the certificate rarely issues unprompted
After the defects period
- Balance falls due on the Performance Certificate
- Typically twelve months after taking-over
- Extendable where defects prevent use of the Works
- The tranche most often abandoned
Questions contractors ask about retention.
How is retention calculated in a construction contract?
A stated percentage, most often 5 or 10 percent, is deducted from the gross value of each interim payment certificate. The deductions accumulate until they reach the limit of retention, which is itself expressed as a percentage of the contract price and is commonly 5 percent. Once that ceiling is reached no further retention should be withheld, and interim certificates should be paid in full from that point onward. This calculator runs that arithmetic against your contract data.
When is retention released under FIDIC?
In two tranches. Under FIDIC 1999 Sub-Clause 14.9 the first half of the retention money is certified for payment when the Taking-Over Certificate is issued for the Works, and the balance is certified when the Defects Notification Period expires and the Performance Certificate is issued. FIDIC 2017 keeps the same two-stage shape. Where the contract provides for sectional taking-over, the first tranche is apportioned to the section concerned rather than released in full.
What is the difference between the retention rate and the limit of retention?
The rate is how much is taken from each certificate. The limit is the total that can ever be held. A contract with a 10 percent rate and a 5 percent limit stops deducting once cumulative retention reaches 5 percent of the contract price, which happens when half the contract value has been certified. Contractors frequently overlook the limit and keep suffering deductions past it, which is one of the quieter forms of revenue leakage on a project.
What happens to retention if the defects period is extended?
The second release follows the Performance Certificate, so an extended Defects Notification Period pushes the balance further out. Under FIDIC the period can be extended for a part of the Works where defects prevent that part from being used, and the extension is limited to two years. Watch for bespoke amendments in GCC contracts that extend the period more aggressively or tie release to conditions beyond the standard form.
Can retention be replaced with a bank guarantee?
Frequently, yes. Many contracts allow a retention bond or bank guarantee to be substituted for cash retention, which returns the money to your balance sheet in exchange for a bank fee, typically 1 to 2 percent per year. Whether the trade makes sense depends on the cost of the facility against the cost of the cash being tied up for the length of the defects period. Run both numbers before deciding.
Is this calculator legal advice?
No. It computes the arithmetic of a conventional retention mechanism on the figures you enter. Whether a release is actually due turns on certification, outstanding defects, sectional completion, and the employer's own compliance with the payment mechanism. For a position you intend to rely on, have the contract reviewed by a practitioner.
The second tranche is the one nobody chases.
CALIM runs close-out and final accounts for SME contractors across the GCC, including the retention releases that fall due long after the site team has moved on.